[Federal Register Volume 69, Number 13 (Wednesday, January 21, 2004)]
[Rules and Regulations]
[Pages 2832-2841]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-1165]


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DEPARTMENT OF JUSTICE

28 CFR Parts 31, 33, 38, 90, 91, and 93

[Docket No. OAG 106; AG Order No. 2703-2004]
RIN 1105-AA83


Participation in Justice Department Programs by Religious 
Organizations; Providing for Equal Treatment of All Justice Department 
Program Participants

AGENCY: Office of the Attorney General, Justice.

ACTION: Final rule.

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SUMMARY: This final rule implements executive branch policy that, 
within the framework of constitutional church-state guidelines, 
religiously affiliated (or ``faith-based'') organizations should be 
able to compete on an equal footing with other organizations for the 
Department's funding. It revises Department regulations to remove 
barriers to the participation of faith-based organizations in 
Department programs and to ensure that these programs are implemented 
in a manner consistent with the requirements of the Constitution, 
including the Religion Clauses of the First Amendment.

DATES: Effective Date: February 20, 2004.

FOR FURTHER INFORMATION CONTACT: Patrick Purtill, Director, Task Force 
for Faith-Based and Community Initiatives, Department of Justice, Room 
4409, 950 Pennsylvania Avenue, NW., Washington, DC 20530; telephone: 
(202) 305-8283 (this is not a toll-free number). Hearing or speech-
impaired individuals may access this telephone number via TTY by 
calling the toll-free Federal Information Relay Service at 1-800-877-
8339. For program-specific information, contact the following offices: 
Office of Justice Programs--Bureau of Justice Assistance, (202) 307-
0635; Office of Juvenile Justice and Delinquency Prevention, (202) 307-
5924; National Institute of Justice, (202) 307-2942; Office for Victims 
of Crime, (202) 514-4696; Office on Violence Against Women, (202) 307-
6026; Executive Office for Weed and Seed, (202) 616-1152; Bureau of 
Prisons, (202) 307-3198; National Institute of Corrections, (202) 307-
3106; Community Oriented Policing Services (COPS), (202) 307-1480. 
These are not toll-free numbers. Hearing or speech-impaired individuals 
may access these telephone numbers via TTY by calling the toll-free 
Federal Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Background--The September 30, 2003 Proposed Rule

    On September 30, 2003, the Department published a proposed rule (68 
FR 56410) to amend Department regulations that imposed unwarranted 
barriers to the participation of faith-based organizations in 
Department programs. The proposed rule was part of the Department's 
effort to fulfill its responsibilities under two Executive Orders 
issued by President Bush. The first of these Orders, Executive Order 
13198 of January 29, 2001, published in the Federal Register on January 
31, 2001 (66 FR 8497), created Centers for Faith-Based and Community 
Initiatives in five cabinet departments--Housing and Urban Development, 
Health and Human Services, Education, Labor, and Justice--and directed 
these Centers to identify and eliminate regulatory, contracting, and 
other programmatic obstacles to the equal participation of faith-based 
and community organizations in the provision of social services by 
their Departments. The second of these Executive Orders, Executive 
Order 13279 of December 12, 2002, published in the Federal Register on 
December 16, 2002 (67 FR 77141), charged executive branch agencies to 
give equal treatment to faith-based and community groups that apply for 
funds to meet social needs in America's communities. President Bush 
thereby called for an end to discrimination against faith-based 
organizations and ordered implementation of these policies throughout 
the executive branch in a manner consistent with the First Amendment to 
the United States Constitution. He further directed that faith-based 
organizations be allowed to retain their religious autonomy over their 
internal governance and composition of boards, and over their display 
of religious art, icons, scriptures, or other religious symbols, when 
participating in government-funded programs. The Administration 
believes that there should be an equal opportunity for all 
organizations--both religious and nonreligious--to participate as 
partners in Federal programs.
    Consistent with the President's initiative, the Department's 
proposed rule of September 30, 2003 proposed to remove unwarranted 
barriers to the participation of faith-based organizations by amending 
the regulations for the following Department offices:
    1. Office of Justice Programs (OJP).
    2. Bureau of Prisons (BOP).
    3. National Institute of Corrections (NIC).
    4. Community Oriented Policing Services (COPS).
    5. Office on Violence Against Women (OVW).
    6. United States Marshals Service.
    7. Asset Forfeiture and Money Laundering Section of the Criminal 
Division.
    8. Civil Rights Division.
    The objective of the proposed rule was to ensure that these 
offices--and in particular the discretionary grants, formula grants, 
contracts, cooperative agreements, and other assistance administered 
through them--were open to all qualified organizations, regardless of 
their religious character, and to establish clearly the proper uses to 
which funds could be put and the conditions for receipt of funding. In 
addition, this proposed rule was designed to ensure that the 
implementation of the Department's programs would be conducted in a 
manner consistent with the requirements of the Constitution, including 
the Religion Clauses of the First Amendment. The proposed rule had the 
following specific objectives:
    1. Participation by faith-based organizations in Justice Department 
programs. The proposed rule provided that organizations would be 
eligible to participate in Department programs without regard to their 
religious character or affiliation, and that organizations could not be 
excluded from the competition for Department funds simply because they 
were religious. Specifically, religious organizations would be eligible 
to compete for funding on the same basis, and under the same 
eligibility requirements, as all other nonprofit organizations. The 
Department, as well as State and local governments administering funds 
under Department programs, would be prohibited from discriminating 
against organizations on the basis of religion, religious belief, or 
religious character in the administration or distribution of Federal 
financial assistance, including grants, contracts, and cooperative 
agreements.
    2. Inherently religious activities. The proposed rule described the 
requirements that would be applicable

[[Page 2833]]

to all recipient organizations regarding the use of Department funds 
for inherently religious activities. Specifically, a participating 
organization could not use direct financial assistance \1\ from the 
Department to support inherently religious activities, such as worship, 
religious instruction, or proselytization. If the organization engaged 
in such activities, it would be required to offer them separately, in 
time or location, from the programs or services funded with direct 
Department assistance, and participation would have to be voluntary for 
the beneficiaries of the Department-funded programs or services. This 
requirement would ensure that direct financial assistance from the 
Department to religious organizations would not be used to support 
inherently religious activities. Such assistance could not be used, for 
example, to conduct worship services, prayer meetings, or any other 
activity that is inherently religious.
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    \1\ As in the proposed rule, the term ``direct financial 
assistance'' is used here to describe funds that are provided 
``directly'' by a governmental entity or an intermediate 
organization with the same responsibilities as a governmental entity 
under a particular program, as opposed to funds that an organization 
receives as the result of the genuine and independent private choice 
of a beneficiary. In other contexts, the term ``direct financial 
assistance'' may be used to refer to those funds that an 
organization receives directly from the Federal Government (also 
known as ``discretionary'' funding), as opposed to funding that it 
receives from a State or local government (also known as 
``indirect'' or ``block grant'' funding). Again, in these 
regulations, the term ``direct financial assistance'' has the former 
meaning.
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    The proposed rule clarified that this restriction would not mean 
that an organization that received Department funds could not engage in 
inherently religious activities, but only that such an organization 
could not fund these activities with direct financial assistance from 
the Department. It further provided that these restrictions on 
inherently religious activities would not apply where Department funds 
were provided to religious organizations as a result of a genuine and 
independent private choice of a beneficiary (e.g., under a program that 
gave a beneficiary a Department-funded voucher, coupon, certificate, or 
another funding mechanism designed to give that beneficiary a choice 
among providers) or through other indirect means, provided the 
religious organizations otherwise satisfied the secular requirements of 
the program. In addition, the proposed rule clarified that the legal 
restrictions applied to religious programs within correctional 
facilities would sometimes be different from the legal restrictions 
that are applied to other Department programs, on account of the fact 
that the degree of government control over correctional environments 
sometimes warrants affirmative steps by prison officials, in the form 
of chaplaincies and similar programs, to ensure that prisoners have 
access to opportunities to exercise their religion in the prison.
    3. Independence of faith-based organizations. The proposed rule 
also clarified that a religious organization that participated in 
Department programs would retain its independence and could continue to 
carry out its mission, including the definition, practice, and 
expression of its religious beliefs, provided that it did not use 
direct financial assistance from the Department to support any 
inherently religious activities, such as worship, religious 
instruction, or proselytization. Among other things, a faith-based 
organization could use space in its facilities to provide Department-
funded services without removing religious art, icons, scriptures, or 
other religious symbols. In addition, a Department-funded religious 
organization could retain religious terms in its organization's name, 
select its board members and otherwise govern itself on a religious 
basis, and include religious references in its organization's mission 
statements and other governing documents.
    4. Nondiscrimination in providing assistance. The proposed rule 
provided that an organization that received direct financial assistance 
from the Department would not be allowed, in providing program 
assistance supported by such funding, to discriminate against a program 
beneficiary or prospective program beneficiary on the basis of religion 
or religious belief.
    5. Assurance requirements. The proposed rule also directed the 
removal of provisions of the Department's agreements, covenants, 
memoranda of understanding, policies, or regulations that require only 
Department-funded religious organizations to provide assurances that 
they would not use monies or property for inherently religious 
activities. All organizations that participated in Department programs, 
including religious ones, would be required to carry out eligible 
activities in accordance with all program requirements and other 
applicable requirements governing the conduct of Department-funded 
activities, including those prohibiting the use of direct financial 
assistance from the Department to engage in inherently religious 
activities. In addition, to the extent that provisions of the 
Department's agreements, covenants, policies, or regulations disqualify 
religious organizations from participating in the Department's programs 
because they are motivated or influenced by religious faith to provide 
government-funded services, or because of their religious character or 
affiliation, the proposed rule would remove that restriction, which is 
inconsistent with governing law.

II. Discussion of Comments Received on the Proposed Rule

    The Department received comments on the proposed rule from 9 
commenters, all of which were interest groups or civil or religious 
liberties organizations. Some of the comments were generally supportive 
of the proposed rule; others were critical. The following is a summary 
of the comments, and the Department's responses.

Participation by Faith-Based Organizations in Justice Department 
Programs

    Several commenters expressed appreciation and support for the 
Department's efforts to clarify the rules governing participation of 
faith-based organizations in its programs. Another commenter 
``applauded'' the distinction made in the regulation between the 
content of social services provided by the religious organization and 
the motivation of that organization. The commenter pointed out that a 
faith-based organization's religious motivation should not constrain 
its ability to provide Department-funded services.
    Other commenters disagreed with the proposed rule on the basis that 
it would allow Federal funds to be given to ``pervasively sectarian'' 
organizations. They maintained that the rule places no limitations on 
the kinds of religious organizations that can receive funds, and they 
requested that ``pervasively sectarian'' organizations be barred from 
receiving Department funds. Similarly, other commenters suggested that 
the proposed rule improperly allows direct grants of public funds to 
religious organizations in which religious missions overpower secular 
functions.
    We do not agree that the Constitution requires the Department to 
distinguish between different religious organizations in providing 
funding for Department programs. Religious organizations that receive 
direct Department funds may not use such funds for inherently religious 
activities. These organizations must ensure that such religious 
activities are separate in time or location from services directly 
funded by the Department and must

[[Page 2834]]

also ensure that participation in such religious activities is 
voluntary. Furthermore, they are prohibited from discriminating against 
a program beneficiary on the basis of religion or a religious belief, 
and program participants that violate these requirements will be 
subject to applicable sanctions and penalties. The regulations thus 
ensure that there is no direct government funding of inherently 
religious activities, as required by current precedent. In addition, 
the Supreme Court's ``pervasively sectarian'' doctrine--which held that 
there are certain religious institutions in which religion is so 
pervasive that no government aid may be provided to them, because their 
performance of even ``secular'' tasks will be infused with religious 
purpose--no longer enjoys the support of a majority of the Court. Four 
Justices expressly abandoned it in Mitchell v. Helms, 530 U.S. 793, 
825-829 (2000) (plurality opinion), and Justice O'Connor's opinion in 
that case, joined by Justice Breyer, set forth reasoning that is 
inconsistent with its underlying premises, see id. at 857-858 
(O'Connor, J., concurring in judgment) (requiring proof of ``actual 
diversion of public support to religious uses''). Thus, six members of 
the Court have rejected the view that aid provided to religious 
institutions will invariably advance the institutions' religious 
purposes, and that view is the foundation of the ``pervasively 
sectarian'' doctrine. The Department therefore believes that under 
current precedent, the Department may fund all service providers, 
without regard to religion and free of criteria that require the 
provider to abandon its religious expression or character.
    Another commenter stated that the rule bans discrimination against 
faith-based providers who apply to participate in Department-funded 
programs, but not discrimination ``in favor of'' such providers. The 
commenter suggested that we prohibit discrimination both ``in favor 
of'' and against faith-based providers.
    We agree with the commenter and have therefore modified the 
language of the final rule to address this concern and to clarify that 
the requirement of nondiscrimination applies to both the Department and 
State or local officials administering Department funds. Section 38.2 
of the final rule reads: ``Neither the Department nor any State or 
local government receiving funds under any Department program shall, in 
the selection of service providers, discriminate for or against an 
organization on the basis of the organization's religious character or 
affiliation.'' We do note, however, that while the final rule does not 
permit discrimination either in favor of or against religious 
providers, nothing in the rule precludes those administering 
Department-funded programs from accommodating religious organizations 
in a manner consistent with the Establishment Clause.

Inherently Religious Activities

    Some commenters suggested that the proposed rule does not 
sufficiently detail the scope of religious content that must be omitted 
from government-funded programs. For example, some suggested that the 
explanation given of ``inherently religious activities'' as ``worship, 
religious instruction, or proselytization'' is unclear or incomplete. 
Relatedly, it was suggested that the proposed rule authorizes conduct 
that will impermissibly convey the message that the government endorses 
religious content. One commenter requested that the proposed rule be 
changed to make clear that the government may not disburse public funds 
to organizations that convey religious messages or in any way advance 
religion.
    The Department disagrees with these comments. Concerning the rule's 
treatment of ``inherently religious'' activities, as the commenters' 
own submissions suggest, it would be difficult to establish an 
acceptable list of all inherently religious activities. Inevitably, the 
regulatory definition would fail to include some inherently religious 
activities or include certain activities that are not inherently 
religious. Rather than attempt to establish an exhaustive regulatory 
definition, the Department has decided to retain the language of the 
proposed rule, which provides examples of the general types of 
activities that are prohibited by the regulations. This approach is 
consistent with Supreme Court precedent, which likewise has not 
comprehensively defined inherently religious activities. For example, 
prayer and worship are inherently religious, but Department-funded 
services do not become inherently religious merely because they are 
conducted by individuals who are religiously motivated to undertake 
them or view the activities as a form of ``ministry.'' As to the 
suggestion that the rule indicates that the Department endorses 
religious content, it again merits emphasis that the rule forbids the 
use of direct government assistance for inherently religious activities 
and states that any such activities must be voluntary and separated, in 
time or location, from activities directly funded by the Department. 
Finally, there is no constitutional support for the view that the 
government must exclude from its programs those organizations that 
convey religious messages or advance religion with their own funds. As 
noted above, the Supreme Court has held that the Constitution forbids 
the use of direct government funds for inherently religious activities, 
but the Court has rejected the presumption that religious organizations 
will inevitably divert such funds and use them for their own religious 
purposes. The Department rejects the view that organizations with 
religious commitments cannot be trusted to fulfill their written 
promises to adhere to grant requirements.

Voucher-Style Programs Under the Rule

    Some commenters claimed that the proposed rule authorizes a voucher 
program for religious organizations without instituting adequate 
constitutional safeguards and requested that the rule be revised to 
comply with the framework instituted by Zelman v. Simmons Harris, 536 
U.S. 639 (2002). These commenters stated that secular alternatives are 
not available in the social service context, eliminating the 
possibility of real choice by program beneficiaries. They requested 
that the proposed rule clearly state that beneficiaries have the right 
to object to a religious provider assigned to them, to receive a 
secular provider, and that they be given notice of these rights.
    The Department respectfully declines to adopt the recommendations 
of the commenters. First of all, the Department does not currently 
operate any voucher-style programs, so any regulations in this regard 
would be purely hypothetical. In addition, as the rule states, any 
voucher-style programs offered by the Department will comply with 
Federal law (including current precedent). The Department thus believes 
that the proposed rule adequately addresses these commenters' 
constitutional concerns.

The ``Separate, in Time or Location'' Requirement

    Some commenters maintained that the proposed rule should be amended 
to clarify the ``separate, in time or location'' requirement. 
Additionally, some have suggested that the requirement be strengthened 
to require that inherently religious activities be ``separate by both 
time and location.''
    The Department declines to adopt these suggestions. As an initial 
matter, the Department does not believe that the requirement is 
ambiguous or necessitates additional regulation for proper adherence. 
Where a religious

[[Page 2835]]

organization receives direct government assistance, any religious 
activities that the organization offers must simply be offered 
separately--in time or place--from the activities supported by direct 
government funds. As to the suggestion that the rule must require 
separation in both time and location, the Department believes that such 
a requirement is not legally necessary and would impose an 
unnecessarily harsh burden on small faith-based organizations, which 
may have access to only one location that is suitable for the provision 
of Department-funded services.

The Exemption of Chaplains From the Restriction on Direct Funding of 
``Inherently Religious'' Activities

    Some commenters have objected that chaplains who work in prisons, 
detention facilities, or community correction centers, and the 
religious or other organizations that assist chaplains in these places, 
should not be exempt from the ``inherently religious activities'' 
restrictions. One commenter would modify the proposed rule to allow 
only clergy, but not the organizations that assist clergy, to be 
exempted from this restriction. Another commenter agreed with the 
exemption for inherently religious activities in the prison context, 
yet requested that the proposed rule clarify that religious activities 
conducted by chaplains in detention facilities be voluntary and not 
coercive.
    As noted in the proposed rule, the legal restrictions that apply to 
religious programs within correctional facilities will sometimes be 
different from legal restrictions that are applied to other Department 
programs. That is because correctional institutions are heavily 
regulated, and this extensive government control over the prison 
environment means that prison officials must sometimes take affirmative 
steps, in the form of chaplaincies and similar programs, to provide an 
opportunity for prisoners to exercise their religion. Without such 
efforts, religious freedom would not exist for Federal prisoners. See 
Cruz v. Beto, 405 U.S. 319, 322 n.2 (1972) (explaining that 
``reasonable opportunities must be afforded to all prisoners to 
exercise the religious freedom guaranteed by the First and Fourteenth 
Amendment without fear of penalty''); Abington School District v. 
Schempp, 374 U.S. 203, 299 (1963) (Brennan, J., concurring) (observing 
that ``hostility, not neutrality, would characterize the refusal to 
provide chaplains and places of worship for prisoners * * * cut off by 
the State from all civilian opportunities for public communion''). Of 
course, religious activities must be voluntary for the inmates.
    Sometimes the activities of chaplains and those assisting them will 
be inherently religious. For example, a chaplain might conduct a 
voluntary worship service or administer sacraments. The rule does not 
effect any change in the professional or legal responsibilities of 
chaplains or those persons or organizations assisting them. Nor does it 
diminish the fact that chaplains' duties often include the provision of 
secular counseling. Rather, the rule is intended simply to make clear 
that the rule's otherwise-applicable restrictions on the use of direct 
Department financial assistance for inherently religious activities do 
not apply to chaplains in correctional facilities or those functioning 
in similar roles, and the Department sees no reason to make a 
distinction between clergy and those assisting them. Accordingly, the 
rule as stated reflects the law and requires no change.

Applicability of Rule to ``Commingled'' Funds

    Another commenter noted that the term ``voluntarily contributes'' 
as used in Sec.  38.1(h) may lead to confusion over the applicability 
of the section to commingled State and local funds. Section 38.1(h) 
states that ``[i]f a State or local government voluntarily contributes 
its own funds to supplement activities carried out under the applicable 
programs, * * * the provisions of this section shall apply'' to all of 
the funds that it commingles with Federal funds. The commenter 
suggested that the paragraph specifically include reference to 
``matching funds'' instead of using the term ``voluntarily 
contributed'' to make it clear that the section shall apply to all 
funds commingled with Federal funds.
    The Department believes that this section of the rule is 
sufficiently clear. As the rule states, when States and local 
governments have the option to commingle their funds with Federal funds 
or to separate State and local funds from Federal funds, Federal rules 
apply if they choose to commingle their own funds with Federal funds. 
Some Department programs explicitly require that Federal rules apply to 
State ``matching'' funds, ``maintenance of effort'' funds, or other 
grantee contributions that are commingled with Federal funds--i.e., are 
part of the grant budget. In these circumstances, Federal rules of 
course remain applicable to both the Federal and State or local funds 
that implement the program.
    Another commenter stated that under the proposed rule, a State or 
local government has the option to segregate the Federal funds or 
commingle them. The commenter requested that the Department mandate 
that State and local funds should be kept separate from any Federal 
funds. Other commenters claimed, however, that the proposed rule is 
unclear whether it applies to State funds, or whether States can 
segregate their funds from Federal funds. The commenters requested that 
the Department revise the proposed rule to clarify the application of 
Federal rules to State funds.
    The Department disagrees with these comments. As an initial matter, 
the Department believes it would be inappropriate to require States and 
local governments to separate their own funds from Federal funds 
circumstances where there is no matching requirement or other required 
grantee contribution. Where no matching requirement or other required 
grantee contribution is applicable, whether to commingle State and 
Federal funds is a decision for the States and local governments to 
make. In addition, for the same reasons that language concerning 
voluntarily commingled funds does not require clarification, the 
Department believes the rule requires no clarification as to whether it 
applies to State funds. As explained above, when States and local 
governments have the option to commingle their funds with Federal funds 
or to separate State and local funds from Federal funds, Federal rules 
apply only if they choose to commingle their own funds with Federal 
funds. Where a Department program explicitly requires that Federal 
rules apply to State ``matching'' funds, ``maintenance of effort'' 
funds, or other grantee contributions that are commingled with Federal 
funds--i.e., are part of the grant budget--Federal rules remain 
applicable to both the Federal and State or local funds that implement 
the program.

Faith-Based Organizations and State Action

    Two commenters claimed that there is a sufficient nexus between the 
organizations covered by the proposed regulation and the government, 
such that the organizations are State actors subject to constitutional 
requirements.
    The Department disagrees with these comments. The receipt of 
government funds does not convert a non-governmental organization into 
a State actor subject to constitutional norms. See Rendell-Baker v. 
Kohn, 457 U.S. 830 (1982) (holding that the employment decisions of a 
private school that receives more than 90 percent of its funding from 
the State are not State action).

[[Page 2836]]

Applicability and Notice of Nondiscrimination Requirements

    Two commenters suggested that the Department cannot simply refer 
grantees to appropriate Department program offices to determine the 
scope of applicable independent statutory provisions requiring all 
grantees to agree not to discriminate in employment on the basis of 
religion.
    The Department understands that grantees need to be aware of such 
provisions and believes such information is most easily obtained and 
best explained by the appropriate Department offices. The purpose of 
this rulemaking is to eliminate undue administrative barriers that the 
Department has imposed to the participation of faith-based 
organizations in Department programs; it is not to alter existing 
statutory requirements, which apply to Department programs to the same 
extent that they applied under the prior rule.

State and Local Diversity Requirements and Preemption

    Additional comments expressed concern that the proposed rule will 
exempt religious organizations from State and local diversity 
requirements. Further, the commenters suggested that the proposed rule 
be modified to state that State and local laws will not be preempted by 
the rule.
    The requirements that govern funding under the Department programs 
at issue in these regulations do not address preemption of State or 
local laws. Federal funds, however, carry Federal requirements. No 
organization is required to apply for funding under these programs, but 
organizations that apply and are selected for funding must comply with 
the requirements applicable to the program funds.

Religious Organizations' Display of Religious Art or Symbols

    Several commenters have disagreed with the provisions allowing 
religious organizations conducting Department-funded programs in their 
facilities to retain the religious art, icons, scriptures, or other 
religious symbols found in their facilities.
    The Department disagrees with these comments. A number of Federal 
statutes affirm the principle embodied in this rule. See, e.g., 42 
U.S.C. 290kk-1(d)(2)(B). Moreover, for no other program participants do 
Department regulations prescribe the types of artwork, statues, or 
icons that may be placed within the structures or rooms in which 
Department-funded services are provided. In addition, a prohibition on 
the use of religious icons would make it more difficult for many faith-
based organizations to participate in Department programs than other 
organizations by forcing them to procure additional space. It would 
thus be an inappropriate and excessive restriction, typical of the 
types of regulatory barriers that this final rule seeks to eliminate. 
Consistent with constitutional church-state guidelines, a faith-based 
organization that participates in Department programs will retain its 
independence and may continue to carry out its mission, provided that 
it does not use direct Department funds to support any inherently 
religious activities. Accordingly, this final rule continues to provide 
that faith-based organizations may use space in their facilities to 
provide Department-funded services, without removing religious art, 
icons, scriptures, or other religious symbols.

Religious Freedom Restoration Act

    Another commenter requested that the Department include language in 
the regulation by way of notice that the Religious Freedom Restoration 
Act (``RFRA''), 42 U.S.C. 2000bb et seq., may also provide relief from 
otherwise applicable provisions prohibiting employment discrimination 
on the basis of religion. The commenter noted that, for example, the 
Department of Health and Human Services has recognized RFRA's ability 
to provide relief from certain employment nondiscrimination 
requirements in the final regulations it promulgated governing its 
substance abuse and mental health programs.
    The Department notes that RFRA, which applies to all Federal law 
and its implementation, 42 U.S.C. 4000bb-3, 4000bb-2(1), is applicable 
regardless of whether it is specifically mentioned in these 
regulations. Whether or not a party is entitled to an exemption or 
other relief under RFRA simply depends upon whether the party satisfies 
the requirements of that statute. The Department therefore declines to 
adopt this recommendation at this time.

Recognition of Religious Organizations' Title VII Exemption

    A number of commenters expressed views on the rule's provision that 
religious organizations do not forfeit their Title VII exemption by 
receiving Department funds, absent statutory authority to the contrary. 
Some expressed appreciation that a religious organization will retain 
its independence in this regard, while others disagreed with the 
provision retaining the Title VII exemption. Some argued that it is 
unconstitutional for the government to provide funding for provision of 
social services to an organization that considers religion in its 
employment decisions. Others argued that Congress must expressly 
preserve religious organizations' Title VII exemptions--as it has done 
in certain welfare reform and substance abuse programs--for such 
organizations that receive Federal funds to retain those exemptions, 
and in any event that it is unwise and unfair to secular organizations 
to preserve such religious exemptions as a matter of executive branch 
policy. These commenters requested that the proposed rule be amended to 
provide that discrimination on the basis of religion with respect to an 
employment position is not allowed if an organization is federally 
funded.
    The Department disagrees with these objections to the rule's 
recognition that a religious organization does not forfeit its Title 
VII exemption when administering Department-funded services. As an 
initial matter, applicable statutory nondiscrimination requirements are 
not altered by this rule. Congress establishes the conditions under 
which religious organizations are exempt from Title VII; this rule 
simply recognizes that these requirements, including their limitations, 
are fully applicable to federally funded organizations unless Congress 
says otherwise. As to the suggestion that the Constitution restricts 
the government from providing funding for social services to religious 
organizations that consider faith in hiring, that view does not 
accurately represent the law. As noted above, the employment decisions 
of organizations that receive extensive public funding are not 
attributable to the State, see Rendell-Baker v. Kohn, 457 U.S. 830 
(1982), and it has been settled for more than 100 years that the 
Establishment Clause does not bar the provision of direct Federal 
grants to organizations that are controlled and operated exclusively by 
members of a single faith. See Bradfield v. Roberts, 175 U.S. 291 
(1899); see also Bowen v. Kendrick, 487 U.S. 589, 609 (1988). Finally, 
the Department notes that allowing religious groups to consider faith 
in hiring when they receive government funds is much like allowing a 
federally funded environmental organization to hire those who share its 
views on protecting the environment--both groups are allowed to 
consider ideology and mission, which improves their effectiveness and 
preserves their integrity. Thus, the Department declines to amend the 
final rule to require religious organizations to forfeit their Title 
VII rights.

[[Page 2837]]

Discrimination on the Basis of Sexual Orientation

    One comment objected to the ability of religious organizations to 
discriminate on the basis of sexual orientation.
    Although Federal law prohibits persons from being excluded from 
participation in Department services or subjected to discrimination 
based on race, color, national origin, sex, age, or disability, it does 
not prohibit discrimination on the basis of sexual orientation. We 
decline to impose additional restrictions by regulation.

Nondiscrimination in Providing Assistance

    Commenters have requested that the proposed rule include a 
provision protecting beneficiaries who object to the religious 
character of a grantee. The comment suggests language that not only 
protects beneficiaries ``on the basis of religion and religious 
belief,'' but also ``on the basis of religion, religious belief, a 
refusal to hold a religious belief, or a refusal to actively 
participate in a religious practice.'' Comments have also requested 
that language be added to clarify that if a person objects to being 
assigned to a religious organization, then the government must provide 
a secular alternative. Other comments request that remedies and a 
grievance process be included in the proposed regulation for 
beneficiaries who do not voluntarily attend religious organization 
programs or who are not provided an adequate alternative.
    The Department declines to adopt these recommendations and believes 
that the existing language prohibiting faith-based organizations from 
discriminating against program beneficiaries on the basis of ``religion 
or religious belief'' is sufficiently explicit to include beneficiaries 
who hold no religious belief. Such a prohibition is straightforward and 
requires no further elaboration. In addition, the rule provides that 
religious organizations may not use direct Federal funding from the 
Department for inherently religious activities and that any such 
activities must be offered separately, in time or location, and must be 
voluntary for program beneficiaries. These requirements further protect 
the rights of program beneficiaries, for whom traditional channels of 
airing grievances are generally available.

Assurance Requirements

    Some commenters have stated that the proposed rule must include 
additional assurances to ensure that religious organizations understand 
that federally funded activities must be carried out in a secular 
manner. Other commenters have suggested that the rule require unique 
contracts between the Department and faith-based organization grantees 
to specify that government funds may not support programs or materials 
that convey religious messages or otherwise promote religion.
    The final rule remains unchanged from the proposed rule on this 
matter. Each grantee must sign assurances certifying that the grantee 
will comply with the various laws applicable to recipients of Federal 
grants, including this final rule and its prohibition on the use of 
direct financial assistance from the Department for inherently 
religious activities. Additional assurances, such as those that are 
being removed by this rule, only perpetuate an unfair presumption that 
program requirements applicable to all program participants are 
insufficient to bind faith-based organizations, such that additional 
requirements and assurances must be imposed on these organizations.
    The Department believes that no additional requirements above and 
beyond those imposed on all participating organizations are needed. In 
issuing this rule, the Department's general approach is that faith-
based organizations are not a category of applicants or program 
participants that require additional requirements or oversight in order 
to ensure compliance with program regulations. Rather, the Department 
believes that faith-based organizations, like other recipients of 
Department funds, fully understand the restrictions on the funding they 
receive, including the restriction that inherently religious activities 
cannot be undertaken with direct Federal funding and must remain 
separate from federally funded activities. The requirements for use of 
funds under a Department program apply to, and are binding on, all 
Department program participants.
    A few commenters have also requested that the proposed rule require 
monthly reports and periodic site visits of faith-based grantees. 
Commenters have suggested that the rule should require religious 
organizations to maintain separate accounts for Federal funds to allow 
for proper oversight.
    The Department imposes no comparable requirements in any other 
context. It would be unfair to require religious organizations alone to 
comply with these additional burdens. Further, the Department finds no 
basis for requiring greater oversight and monitoring of faith-based 
organizations than of other program participants simply because they 
are faith-based organizations. All program participants must be 
monitored for compliance with program requirements, and no program 
participant may use Department funds for any ineligible activity, 
whether that activity is an inherently religious activity or a 
nonreligious activity that is outside the scope of the program at 
issue. Many secular organizations participating in Department programs 
also receive funding from several sources (private, State, or local) to 
carry out activities that are ineligible for funding under Department 
programs. In many cases, the non-eligible activities are secular 
activities but not activities eligible for funding under Department 
programs. All program participants receiving funding from various 
sources and carrying out a wide range of activities must ensure through 
proper accounting principles that each set of funds is applied only to 
the activities for which the funding was provided. Applicable policies, 
guidelines, and regulations prescribe the cost accounting procedures 
that are to be followed in using Department funds. This system of 
monitoring is more than sufficient to address the commenters' concerns, 
and the amount of oversight of religious organizations necessary to 
accomplish these purposes is no different than that involved in other 
publicly funded programs that the Supreme Court has upheld.

III. Findings and Certifications

Executive Order 12866--Regulatory Planning and Review

    The Office of Management and Budget (OMB) reviewed this final rule 
under Executive Order 12866, Regulatory Planning and Review. OMB 
determined that the rule is a ``significant regulatory action'' as 
defined in section 3(f) of the Order (although not an economically 
significant regulatory action under the Order) and, accordingly, 
reviewed the rule. Any changes made to the rule as a result of that 
review are identified in the docket file, which is available for public 
inspection in the office of the Task Force for Faith-based and 
Community Initiatives, Room 4409, 950 Pennsylvania Ave., NW., 
Washington, DC 20530.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments, and on the private sector. This final rule does not impose 
any Federal mandates on any State, local, or tribal governments, or the

[[Page 2838]]

private sector, within the meaning of the Unfunded Mandates Reform Act 
of 1995.

Executive Order 13132--Federalism

    Executive Order 13132, Federalism, prohibits an agency from 
publishing any rule that has federalism implications if the rule either 
imposes substantial direct compliance costs on State and local 
governments and is not required by statute, or the rule preempts State 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive Order. Consistent with Executive Order 
13132, the Department specifically solicited comments from State and 
local government officials on this proposed rule, and no comments from 
these entities were submitted that raised federalism concerns.

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
has been made for this rule in accordance with Department regulations 
at 28 CFR part 61, which implement section 102(2)(C) of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4332). The Finding of No 
Significant Impact is available for public inspection between the hours 
of 8:30 a.m. and 5:30 p.m. weekdays in the Task Force for Faith-based 
and Community Initiatives, Office of the Deputy Attorney General, Room 
4413, Department of Justice, 950 Pennsylvania Ave., NW., Washington, DC 
20530.

Regulatory Flexibility Act

    The Attorney General, in accordance with the Regulatory Flexibility 
Act (5 U.S.C. 605(b)), has reviewed and approved this final rule and in 
so doing certifies that the rule will not have a significant economic 
impact on a substantial number of small entities. The final rule will 
not impose any new costs, or modify existing costs, applicable to 
Department grantees. Rather, the purpose of the rule is to remove 
policy prohibitions that currently restrict the equal participation of 
religious or religiously affiliated organizations (large and small) in 
the Department's programs. Notwithstanding the Department's 
determination that this rule will not have a significant economic 
effect on a substantial number of small entities, the Department 
specifically invited comments regarding any less burdensome 
alternatives to this rule that would meet the Department's objectives 
as described in this preamble.

Catalog of Federal Domestic Assistance Numbers

    The Catalog of Federal Domestic Assistance program numbers for the 
programs affected by this rule are 16.579, 16.592, 16.593, 16.523, 
16.540, 16.548, 16.549, 16.575, 16.588, 16.580, 16.613, 16.202, 16.585, 
16.595, 16.560, 16.563, 16.541, 16.542, 16.728, 16.729, 16.730, 16.731, 
16.732, 16.543, 16.544, 16.547, 16.726, 16.547, 16.582, 16.583, 16.524, 
16.525, 16.587, 16.589, 16.602, 16.005, 16.108, 16.320, 16.526, 16.710, 
16.110.

List of Subjects

28 CFR Part 31

    Grant programs--law, Juvenile delinquency, Reporting and 
recordkeeping requirements.

28 CFR Part 33

    Administrative practice and procedure, Grants.

28 CFR Part 38

    Administrative practice and procedure, Grant programs, Reporting 
and recordkeeping requirements, Nonprofit organizations.

28 CFR Part 90

    Grant programs, Judicial administration--violence against women.

28 CFR Part 91

    Grant Programs--correctional facilities.

28 CFR Part 93

    Grant programs, Judicial administration.


0
For the reasons stated in the preamble, the Department amends chapter I 
of Title 28 of the Code of Federal Regulations as follows:

PART 31--OJJDP GRANT PROGRAMS

0
1. The authority citation for part 31 is revised to read as follows:


    Authority: 42 U.S.C 5601 through 5785; Pub. L. 108-7, 117 Stat. 
11; 5 U.S.C. 301.


0
2. Add Sec.  31.404 to subpart A to read as follows:


Sec.  31.404  Participation by faith-based organizations.

    The funds provided under this part shall be administered in 
compliance with the standards set forth in part 38 (Equal Treatment for 
Faith-based Organizations) of this chapter.

0
3. In Sec.  31.502, add paragraph (a)(3) to read as follows:


Sec.  31.502  Assurances and plan information.

    (a) * * *
    (3) The funds provided under this part shall be administered in 
compliance with the standards set forth in part 38 (Equal Treatment for 
Faith-based Organizations) of this chapter.
* * * * *

PART 33--BUREAU OF JUSTICE ASSISTANCE GRANT PROGRAMS

0
4. The authority section for part 33 is revised to read as follows:

    Authority: 42 U.S.C. 3701 through 3797y-4; 5 U.S.C. 301.


0
5. In subpart A under the heading Additional Requirements, add Sec.  
33.53 to read as follows:


Sec.  33.53  Participation by faith-based organizations.

    The funds provided under this part shall be administered in 
compliance with the standards set forth in part 38 (Equal Treatment for 
Faith-based Organizations) of this chapter.

0
6. Add part 38 to read as follows:

PART 38--EQUAL TREATMENT FOR FAITH-BASED ORGANIZATIONS

Sec.
38.1 Discretionary grants, contracts, and cooperative agreements.
38.2 Formula grants.

    Authority: 28 U.S.C. 509; 5 U.S.C. 301; E.O. 13279, 67 FR 77141, 
3 CFR, 2002 Comp., p. 258; 18 U.S.C. 4001, 4042, 5040; 20 U.S.C. 
1152; 21 U.S.C. 871; 25 U.S.C. 3681; Pub. L. 107-273, 116 Stat. 1758 
(42 U.S.C. 3751, 3753, 3762b, 3782, 3796dd-1, 3796dd-7, 3796gg-1, 
3796gg-0b, 3796gg-3, 3796h, 3796ii-2, 3797u-3, 3797w, 5611, 5672, 
10604, 14071).


Sec.  38.1  Discretionary grants, contracts, and cooperative 
agreements.

    (a) Religious organizations are eligible, on the same basis as any 
other organization, to participate in any Department program for which 
they are otherwise eligible. Neither the Department nor any State or 
local government receiving funds under any Department program shall, in 
the selection of service providers, discriminate for or against an 
organization on the basis of the organization's religious character or 
affiliation. As used in this section, ``program'' refers to a grant, 
contract, or cooperative agreement funded by a discretionary grant from 
the Department. As used in this section, the term ``grantee'' includes 
a recipient of a grant, a signatory to a cooperative agreement, or a 
contracting party.
    (b) (1) Organizations that receive direct financial assistance from 
the

[[Page 2839]]

Department under any Department program may not engage in inherently 
religious activities, such as worship, religious instruction, or 
proselytization, as part of the programs or services funded with direct 
financial assistance from the Department. If an organization conducts 
such activities, the activities must be offered separately, in time or 
location, from the programs or services funded with direct financial 
assistance from the Department, and participation must be voluntary for 
beneficiaries of the programs or services funded with such assistance.
    (2) The restrictions on inherently religious activities set forth 
in paragraph (b)(1) of this section do not apply to programs where 
Department funds are provided to chaplains to work with inmates in 
prisons, detention facilities, or community correction centers, or 
where Department funds are provided to religious or other organizations 
for programs in prisons, detention facilities, or community correction 
centers, in which such organizations assist chaplains in carrying out 
their duties.
    (c) A religious organization that participates in the Department-
funded programs or services will retain its independence from Federal, 
State, and local governments, and may continue to carry out its 
mission, including the definition, practice, and expression of its 
religious beliefs, provided that it does not use direct financial 
assistance from the Department to support any inherently religious 
activities, such as worship, religious instruction, or proselytization. 
Among other things, a faith-based organization that receives financial 
assistance from the Department may use space in its facilities, without 
removing religious art, icons, scriptures, or other religious symbols. 
In addition, a religious organization that receives financial 
assistance from the Department retains its authority over its internal 
governance, and it may retain religious terms in its organization's 
name, select its board members on a religious basis, and include 
religious references in its organization's mission statements and other 
governing documents.
    (d) An organization that participates in programs funded by direct 
financial assistance from the Department shall not, in providing 
services, discriminate against a program beneficiary or prospective 
program beneficiary on the basis of religion or religious belief.
    (e) No grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation that is used by the Department or 
a State or local government in administering financial assistance from 
the Department shall require only religious organizations to provide 
assurances that they will not use monies or property for inherently 
religious activities. Any such restrictions shall apply equally to 
religious and non-religious organizations. All organizations that 
participate in Department programs, including religious ones, must 
carry out eligible activities in accordance with all program 
requirements and other applicable requirements governing the conduct of 
Department-funded activities, including those prohibiting the use of 
direct financial assistance from the Department to engage in inherently 
religious activities. No grant document, agreement, covenant, 
memorandum of understanding, policy, or regulation that is used by the 
Department or a State or local government in administering financial 
assistance from the Department shall disqualify religious organizations 
from participating in the Department's programs because such 
organizations are motivated or influenced by religious faith to provide 
social services, or because of their religious character or 
affiliation.
    (f) Exemption from Title VII employment discrimination 
requirements. A religious organization's exemption from the Federal 
prohibition on employment discrimination on the basis of religion, set 
forth in section 702(a) of the Civil Rights Act of 1964, 42 U.S.C. 
2000e-1, is not forfeited when the organization receives direct or 
indirect financial assistance from the Department. Some Department 
programs, however, contain independent statutory provisions requiring 
that all grantees agree not to discriminate in employment on the basis 
of religion. Accordingly, grantees should consult with the appropriate 
Department program office to determine the scope of any applicable 
requirements.
    (g) In general, the Department does not require that a grantee, 
including a religious organization, obtain tax-exempt status under 
section 501(c)(3) of the Internal Revenue Code to be eligible for 
funding under Department programs. Many grant programs, however, do 
require an organization to be a ``nonprofit organization'' in order to 
be eligible for funding. Individual solicitations that require 
organizations to have nonprofit status will specifically so indicate in 
the eligibility section of a solicitation. In addition, any 
solicitation that requires an organization to maintain tax-exempt 
status will expressly state the statutory authority for requiring such 
status. Grantees should consult with the appropriate Department program 
office to determine the scope of any applicable requirements. In 
Department programs in which an applicant must show that it is a 
nonprofit organization, the applicant may do so by any of the following 
means:
    (1) Proof that the Internal Revenue Service currently recognizes 
the applicant as an organization to which contributions are tax 
deductible under section 501(c)(3) of the Internal Revenue Code;
    (2) A statement from a State taxing body or the State secretary of 
state certifying that:
    (i) The organization is a nonprofit organization operating within 
the State; and
    (ii) No part of its net earnings may lawfully benefit any private 
shareholder or individual;
    (3) A certified copy of the applicant's certificate of 
incorporation or similar document that clearly establishes the 
nonprofit status of the applicant; or
    (4) Any item described in paragraphs (b)(1) through (3) of this 
section if that item applies to a State or national parent 
organization, together with a statement by the State or parent 
organization that the applicant is a local nonprofit affiliate.
    (h) Effect on State and local funds. If a State or local government 
voluntarily contributes its own funds to supplement activities carried 
out under the applicable programs, the State or local government has 
the option to separate out the Federal funds or commingle them. If the 
funds are commingled, the provisions of this section shall apply to all 
of the commingled funds in the same manner, and to the same extent, as 
the provisions apply to the Federal funds.
    (i) To the extent otherwise permitted by Federal law, the 
restrictions on inherently religious activities set forth in this 
section do not apply where Department funds are provided to religious 
organizations as a result of a genuine and independent private choice 
of a beneficiary, provided the religious organizations otherwise 
satisfy the requirements of the program. A religious organization may 
receive such funds as the result of a beneficiary's genuine and 
independent choice if, for example, a beneficiary redeems a voucher, 
coupon, or certificate, allowing the beneficiary to direct where funds 
are to be paid, or a similar funding mechanism provided to that 
beneficiary and designed to give that beneficiary a choice among 
providers.


Sec.  38.2  Formula grants.

    (a) Religious organizations are eligible, on the same basis as any 
other

[[Page 2840]]

organization, to participate in any Department program for which they 
are otherwise eligible. Neither the Department nor any State or local 
government receiving funds under any Department program shall, in the 
selection of service providers, discriminate for or against an 
organization on the basis of the organization's religious character or 
affiliation. As used in this section, ``program'' refers to a grant, 
contract, or cooperative agreement funded by a formula or block grant 
from the Department. As used in this section, the term ``grantee'' 
includes a recipient of a grant, a signatory to a cooperative 
agreement, or a contracting party.
    (b) (1) Organizations that receive direct financial assistance from 
the Department may not engage in inherently religious activities, such 
as worship, religious instruction, or proselytization, as part of the 
programs or services funded with direct financial assistance from the 
Department. If an organization conducts such activities, the activities 
must be offered separately, in time or location, from the programs or 
services funded with direct financial assistance from the Department, 
and participation must be voluntary for beneficiaries of the programs 
or services funded with such assistance.
    (2) The restrictions on inherently religious activities set forth 
in paragraph (b)(1) of this section do not apply to programs where 
Department funds are provided to chaplains to work with inmates in 
prisons, detention facilities, or community correction centers, or 
where Department funds are provided to religious or other organizations 
for programs in prisons, detention facilities, or community correction 
centers, in which such organizations assist chaplains in carrying out 
their duties.
    (c) A religious organization that participates in the Department-
funded programs or services will retain its independence from Federal, 
State, and local governments, and may continue to carry out its 
mission, including the definition, practice, and expression of its 
religious beliefs, provided that it does not use direct financial 
assistance from the Department to support any inherently religious 
activities, such as worship, religious instruction, or proselytization. 
Among other things, a faith-based organization that receives financial 
assistance from the Department may use space in its facilities, without 
removing religious art, icons, scriptures, or other religious symbols. 
In addition, a religious organization that receives financial 
assistance from the Department retains its authority over its internal 
governance, and it may retain religious terms in its organization's 
name, select its board members on a religious basis, and include 
religious references in its organization's mission statements and other 
governing documents.
    (d) An organization that participates in programs funded by direct 
financial assistance from the Department shall not, in providing 
services, discriminate against a program beneficiary or prospective 
program beneficiary on the basis of religion or religious belief.
    (e) No grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation that is used by the Department or 
a State or local government in administering financial assistance from 
the Department shall require only religious organizations to provide 
assurances that they will not use monies or property for inherently 
religious activities. Any such restrictions shall apply equally to 
religious and non-religious organizations. All organizations that 
participate in Department programs, including religious ones, must 
carry out eligible activities in accordance with all program 
requirements and other applicable requirements governing the conduct of 
Department-funded activities, including those prohibiting the use of 
direct financial assistance to engage in inherently religious 
activities. No grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation that is used by the Department or 
a State or local government in administering financial assistance from 
the Department shall disqualify religious organizations from 
participating in the Department's programs because such organizations 
are motivated or influenced by religious faith to provide social 
services, or because of their religious character or affiliation.
    (f) Exemption from Title VII employment discrimination 
requirements. A religious organization's exemption from the Federal 
prohibition on employment discrimination on the basis of religion, set 
forth in section 702(a) of the Civil Rights Act of 1964, 42 U.S.C. 
2000e-1, is not forfeited when the religious organization receives 
direct or indirect financial assistance from Department. Some 
Department programs, however, contain independent statutory provisions 
requiring that all grantees agree not to discriminate in employment on 
the basis of religion. Accordingly, grantees should consult with the 
appropriate Department program office to determine the scope of any 
applicable requirements.
    (g) In general, the Department does not require that a grantee, 
including a religious organization, obtain tax-exempt status under 
section 501(c)(3) of the Internal Revenue Code to be eligible for 
funding under Department programs. Many grant programs, however, do 
require an organization to be a ``nonprofit organization'' in order to 
be eligible for funding. Individual solicitations that require 
organizations to have nonprofit status will specifically so indicate in 
the eligibility section of a solicitation. In addition, any 
solicitation that requires an organization to maintain tax-exempt 
status will expressly state the statutory authority for requiring such 
status. Grantees should consult with the appropriate Department program 
office to determine the scope of any applicable requirements. In 
Department programs in which an applicant must show that it is a 
nonprofit organization, the applicant may do so by any of the following 
means:
    (1) Proof that the Internal Revenue Service currently recognizes 
the applicant as an organization to which contributions are tax 
deductible under section 501(c)(3) of the Internal Revenue Code;
    (2) A statement from a State taxing body or the State secretary of 
state certifying that:
    (i) The organization is a nonprofit organization operating within 
the State; and
    (ii) No part of its net earnings may lawfully benefit any private 
shareholder or individual;
    (3) A certified copy of the applicant's certificate of 
incorporation or similar document that clearly establishes the 
nonprofit status of the applicant; or
    (4) Any item described in paragraphs (b)(1) through (3) of this 
section if that item applies to a State or national parent 
organization, together with a statement by the State or parent 
organization that the applicant is a local nonprofit affiliate.
    (h) Effect on State and local funds. If a State or local government 
voluntarily contributes its own funds to supplement activities carried 
out under the applicable programs, the State or local government has 
the option to separate out the Federal funds or commingle them. If the 
funds are commingled, the provisions of this section shall apply to all 
of the commingled funds in the same manner, and to the same extent, as 
the provisions apply to the Federal funds.
    (i) To the extent otherwise permitted by Federal law, the 
restrictions on inherently religious activities set forth in this 
section do not apply where Department funds are provided to

[[Page 2841]]

religious organizations as a result of a genuine and independent 
private choice of a beneficiary, provided the religious organizations 
otherwise satisfy the requirements of the program. A religious 
organization may receive such funds as the result of a beneficiary's 
genuine and independent choice if, for example, a beneficiary redeems a 
voucher, coupon, or certificate, allowing the beneficiary to direct 
where funds are to be paid, or a similar funding mechanism provided to 
that beneficiary and designed to give that beneficiary a choice among 
providers.

PART 90--VIOLENCE AGAINST WOMEN

0
7. The authority citation for part 90 is revised to read as follows:

    Authority: 42 U.S.C. 3711-3796gg-7; Sec. 826, Part E, Title 
VIII, Pub. L. 105-244, 112 Stat. 1581, 1815.


0
8. Add Sec.  90.3 to subpart A to read as follows:


Sec.  90.3  Participation by faith-based organizations.

    The funds provided under this part shall be administered in 
compliance with the standards set forth in part 38 (Equal Treatment for 
Faith-based Organizations) of this chapter.

PART 91--GRANTS FOR CORRECTIONAL FACILITIES

0
9. The authority citation for part 91 is revised to read as follows:

    Authority: 42 U.S.C. 13701 through 14223.


0
10. In Sec.  91.3, add paragraph (g) to read as follows:


Sec.  91.3  General eligibility requirements.

* * * * *
    (g) The funds provided under this part shall be administered in 
compliance with the standards set forth in part 38 (Equal Treatment for 
Faith-based Organizations) of this chapter.

0
11. In Sec.  91.23, add paragraph (d) to read as follows:


Sec.  91.23  Grant authority.

* * * * *
    (d) The funds provided under this part shall be administered in 
compliance with the standards set forth in part 38 (Equal Treatment for 
Faith-based Organizations) of this chapter.

PART 93--PROVISIONS IMPLEMENTING THE VIOLENT CRIME CONTROL AND LAW 
ENFORCEMENT ACT OF 1994

0
12. The authority citation for part 93 is added to read as follows:

    Authority: 42 U.S.C. 3797u through 3797y-4.


0
13. In Sec.  93.4, add paragraph (c) to read as follows:


Sec.  93.4  Grant authority.

* * * * *
    (c) The funds provided under this part shall be administered in 
compliance with the standards set forth in part 38 (Equal Treatment for 
Faith-based Organizations) of this chapter.

    Dated: January 14, 2004.
John Ashcroft,
Attorney General.
[FR Doc. 04-1165 Filed 1-20-04; 8:45 am]
BILLING CODE 4410-18-P